As I write this, the Canadian Dollar is trading at 99.9cents US. It hit parity yesterday and actually rose above $1.00 US. It hasn’t done this since my first birthday. Bloomberg is reporting that this may be a long-term situation.
I hope it is. We Canadians have been lazy, the low dollar has been a crutch for our economy. Here’s what I mean:
Our company arranges internships for universities. Our labour costs are between $30 and $60 per hour. We factor this into an internship placement and with other costs, this means we can charge universities and students a net price of $899 and be able to spend up to 15 hours on an internship placement while still earning a profit.
Students from Korea, Brazil and Mexico account for half of our business, and for them our prices are fixed in US dollars for the rest of 2007. This means that our earnings are declining while our costs do not. So what do we do? Lower wages? Hell, no – we can’t – not in this labour market. The unemployment rate in British Columbia is 4% and most of that 4% are new immigrants or unskilled labour or people changing jobs. The unemployment rate for professionals? It can’t be more than 1%. If we lowered salaries, we’d lose staff to our competitors.
So what do we do? The only thing we can do – work harder and better. Become more productive.
I despise the Federal Liberals and won’t hide that, but sometimes a little wisdom inadvertently slips out from that camp. Here is their “leader” Stephane Dion on productivity:
I don’t believe small is beautiful necessarily, or big is beautiful necessarily. There are a lot of simplistic assumptions about that. Sometimes when you are big, you die. What you need to be is fit,” Mr. Dion said.
He’s right there. Businesses in Canada needed to get fit or die. We’ve been putting this off too long – with parity, the crutch has been torn away from us and now we need to prove what we are worth.
We need to start doing our jobs in 10 hours instead of 15, and a lot of other people need to start making changes too – hopefully our competitors won’t … and hopefully no government will get in the way of us driving our competitors into the dirt.
oops – sorry Justin, accidentally deleted your comment while clearing out spam. My bad.